Professor M. S. Rao’s Book Review - HR from the Outside In: Six Competencies for the Future of Human Resources

Acclaim about the Book

“This book is a crucial blueprint of what it takes to succeed. A must have for every HR professional.”—Lynda Gratton, Professor, London Business School

What are the Details of the Book?

If you want to acquire authentic knowledge on Human Resources, read this book. If you want to acquire updated tools and techniques on HR and leadership, read this book. If you want to grow as an effective and everlasting leader, read this book. Dave Ulrich, Jon Younger, Wayne Brockbank and Mike Ulrich’s authored book HR from the Outside In: Six Competencies for the Future of Human Resources is divided into 11 chapters with Appendix A, B, C and Notes and Index.

What is Inside?

In this book, authors lay out six (extensive) competencies for the future of human resources. They include such domains as credible activist, capability builder, change champion and tech proponent. The most important focus, the foundational objective of the book, is the chapter about the strategic positioner: HR professionals who facilitate business strategy through their objectives and practices. Although the authors provide ways for getting at business strategy and applying it to HR, the most useful and unique means for getting at strategy issues is found in the chapter on building capabilities. There, the authors detail an approach that takes the strategic emphasis seriously, and walks the reader through a six step process for aligning HR practices as follows:

• Business: where will we do a strategic HR linkage?
• Environment: What are the business trends?
• Strategy: What are the strategic drivers for the business?
• HR investment: What are hr priorities?
• Action plans: Who will do what, when, where and how?
• Measures or metrics: How will we measure progress?

Chapter 1 offers the context for HR. Authors define the history of HR work in waves and describe the next wave, what they have termed “outside-in HR.” They propose that as HR professionals and departments recognize and respond to external trends and subsequent paradoxes, they will create value by connecting internal actions with outside expectations.  Chapter 2 traces the evolution of the concept of competences for HR professionals based on authors’ 25 years or research. The chapter shares the methodology that distinguishes their research from any other approach to identifying the competencies that HR professionals need to have to influence their perceived performance effectiveness and the success of their businesses.

Chapter 3 through 8 offers specific insights into the six domains of HR competency that currently define HR professional effectiveness and help them drive business success. For each of the six competency domains, they review their research findings, report case studies of those who currently demonstrate these competencies, and offer tools to assess and improve each competency.

Chapter 3 reports on being a strategic positioner, the competency domain that describes how effective HR professionals turn insight on external demands and expectations into innovative and aligned HR practices that drive organizational capability development. Chapter 4 reviews the credible activist who builds trust with people through business results and strong, supportive relationships.  Chapter 5 discusses the role of the capability builder, who defines, audits, and invests in the organization’s capacity to do what it needs to do in its current environment. Chapter 6 covers the tools for initiating and sustaining change as a change champion.  Chapter 7 lays out ways that the effective HR innovator and integrator converts HR initiatives into impactful, aligned, and sustainable processes. Chapter 8 examines the competency of technology proponent, a new insight focusing on how strong HR professionals use information and new ways of compiling it to address both administrative and strategic requirements.

In Chapter 9, authors discuss ways to become a more effective HR professional and to support the development HR professionalism, based on work with hundreds of organizations and thousands of HR professionals. Chapter 10 reports their findings on creating and managing an effective HR department. These findings highlight where HR leaders should focus their scarce resources and attention to make sure that their HR department delivers business value.  Finally, in Chapter 11, they offer an overview of the implications of their findings for the HR field both now and in future.

The authors outline 6 core competencies that have been extrapolated from the research:

1. Strategic Positioner - HR professionals must develop the skills to influence strategy formulation and position the organization for ongoing success.

2. Capability Builder - HR professionals must be able to identify and build organizational capabilities

3. Innovator & Integrator - HR professionals should innovate and integrate systems that align talent, leadership and organization practices to the goals of the firm

4. Technology Proponent - Advice on how to use technology to connect talented employees and smooth out HR processes

5. Change Champion - The authors give counsel on how to initiate and sustain change

6. Credible Activist - HR professionals should continue to build personal credibility and a point of view about the organizations for which they work.

Authors recommend four principles in optimizing human capital through workforce planning and analytics: define critical strategic roles; conduct a Strength, Weakness, Opportunity, and Threat (SWOT) assessment; buy, build, or both; and manage the change process. They have found six investments that can help upgrade talent:

1.    Buy: Recruiting, sourcing, securing new talent into the organization

2.    Build: Helping people grow through training or life experiences

3.    Borrow: Bringing knowledge into the organization through external advisors or partners

4.    Boost: Promoting the right people into key jobs

5.    Bounce: Removing poor performers from their jobs-and from the organization if there are no jobs in which they will perform well

6.    Bind: Retaining top talent through opportunity, reward, and nonfinancial recognition.

When you want to get somewhere, it’s useful to map out your destination and the steps you need to take to get there. Based on the goal of developing competency in the six domains authors have identified, these are the steps to take in an effective plan:

1. Own your career.
2. Learn about yourself. What turns you on? What gets in your way?
3. Define your brand. How do you want to be known in the organization?
4. Assess your strengths and weaknesses.
5. Create opportunities for growth – from the outside in.
6. Conduct projects and experiments.
7. Follow up to build and reinforce awareness.

The book outlines that the best HR academies have the following qualities:

·         Participants work on problems that the business sees as important, not HR projects.

·         Participants work in teams. Team members keep one another engaged, and when they are brought together across functional areas or business units, they see the bigger picture or the organization.

·         Program administrators encourage line management participation. Executive participation provides a reinforcement of the importance of HR along with some perspective on what executives are thinking about and how they read the environment, assess the organsation, and define goals.

·         Program administrators also encourage customer and investor or analyst participation. There is power in asking key stakeholder to identify ways for the organization to improve the strength and competence of its human capital.

The book explains aggregate feedback which is a lens through which leaders identify team or organizational competency strengths and weaknesses. This kind of feedback can become a source of organizational knowledge and driver for team improvement in several ways:

·         Bring the team together to identify “early win” opportunities for improvement.

·         Direct individuals to identify actions that would benefit the overall team.

·         Bring in a colleague from another area on a project or full-time basis to act as a guide or team leader in making change; for a technology proponent, a young IT high potential might provide useful perspective on how to improve HR technology proficiency and application.

·         Use after-action reviews to assess the effectiveness of the organization’s approach to technology changes and developments in the past. 

·         Consider acquiring a young mentor from inside the organization to help you gain insight into how to use technology to go beyond automating transactional HR work and to connect to people and information in the news ways that have opened up.

·         Adopt 720-degree feedback. Useful as 360-degree feedback is, we now encourage HR leaders to begin to look for feedback from the outside in. Many HR leaders are engaging customers, suppliers, and partner organizations in indemnifying needs for development and improvement in HR.

Strategic choices give businesses unique sources of competitive differentiation. Traditionally, strategic, differentiators may include operational efficiency, product leadership, and customer intimacy. More recently, strategic choices define unique ways that companies meet customer expectations. In recent years, competitive differentiation choices have come to include:

·         Managing risk:  The ability to identify and manage compliance, strategic, operational, and financial risks.

·         Global positioning: The ability to enter emerging markets beyond the relatively well-established BRIC countries (Brazil, Russia, India, and China) a group that Goldman Sachs identifies as N 11, including Turkey, Indonesia, Vietnam, the Philippines, Nigeria, Iran, Mexico, and Egypt.

·         Leveraging information: The ability to use information as a way to anticipate customer expectations and to do predictive analytics to figure out how to prioritize leading indicators of business success.

·         Managing a globally diverse workforce: The ability to attract employees from around the world to enable global mobility in moving employees to the places where they will be able to contribute most effectively.

·         Adapting or changing: The ability to respond quickly to emerging business opportunities and threats.

·         Building corporate social responsibility: The ability to build a reputation as a “green organization” that supports responsibility for the planet, employees and customers.

·         Collaborating or partnering across boundaries: The ability to form alliances or partnerships both across functions inside the organization and with customers, competitors, and partners outside the organization.

·         Focusing on simplifying: The ability to turn complexity into an elegant and well-coordinated process that concentrates attention on the critical few priorities.

According to David Court, marketers need to develop competence in these areas:

·         Taking greater initiative as a strategy activist

·         Developing the skills to lead companywide change in response to changing customer buying patterns

·         Assuming accountability for the company’s external brand or profile as a whole; creating collaborative organizational relationships that align the organization’s overall message to different stakeholders (customers, investors, communities)

·         Building marketing capabilities throughout the organization as whole

·         Identifying the critical touch points for a customer and managing the complexity of a consistent customer experience

·         Providing insight and strategic recommendations based on evidence-based analysis.

The authors reveals that in the early rounds of the study (1987, 1992, and 1997), participants came largely from North America. Beginning in 2002, authors sought partners in other parts of the world. The first of the regions to be involved were India, Europe, and Latin America. Since 2002 the survey has become increasingly global. Authors have been honored with involvement of outstanding colleagues from around the world. Our 2012 research advances the global range of the study to include the leading HR professional organizations in Australia (AHRI), China (51Job), India (NHRD), Latin America (IAE), the Middle East (ASHRM), Northern Europe (HR Norge), South Africa (IPM), and Turkey (SCP)

In 1982 Richard Boyatzis of McBer Consulting published The Competent Manager. This work had substantial impact on the popularity of the competency approach because it was the most rigorous application of competencies to measure, predict, and build effective managerial performance. Boyatzis’s definition of competency has been generally accepted. His definition is that “a competency is a characteristic of a person that results in consistently effective performance in a job.”

Throughout their work, authors have sought to raise the standards of the HR profession. By helping HR professionals discover which competencies and activities add the greatest value to individual effectiveness and business success, they hope to inspire the field to add greater value-and they have provided specific suggestions for how this can be achieved.

In the last round of HRCS, the credible activist domain was central to developing a reputation is an HR high performer. In that research, four factors contributed to the category:

1.    Delivering results with integrity: HR professionals develop a track record by demonstrating the judgment required to define the right priorities along with the skill to address priorities in the right way.

2.    Sharing information: Sharing information starts with the ability to communicate effectively in person and in writing. It also required building a broad and deep network of relationships across the organization and certainly beyond HR.

3.    Building trust: Building trust focused on building strong relationships with line and HR colleagues.

4.    HR with attitude: Activism was the new message of the 2007 research, and it indicated the importance both credibility and activism or initiative in contributing to the organization.

There are several ways to reduce the risk of innovation, whether you are innovating in the course of self-awareness development or innovating on behalf of the business:

Test the value of the effort: Ask whether this is what we want to spend precious time and effort on.

Be specific and explicit about the goals: Use “Smart” as an acronym for good goal setting: specific, measurable, ambitious, realistic, time-bound.

Collect the right data to get traction on the problem.

Consider contingencies and anticipate areas of difficulty, challenge, and suspicion. Then recruit help from the stakeholders who will be affected by implementation.

Ask for help from business partners: there is power in asking for help or feedback and in engaging line mangers with whom you work by saying. “I am working on improving my business knowledge and would like your help. Would you involve me in pertinent meetings or direct me to colleagues who can help me understand the business and where and how HR can be helpful on a more proactive basis?” This kind of request is rarely refused, and it is double useful. Besides the specific information it evokes, it engages line leaders with you and helps build your relationship with them.

Celebrate small wins: Herb Shepard in his “Rules of Thumb for Change Agents” wrote that change means many small fires or small steps. It is much the same in managing your own personal growth and development. These small steps – or as some call them, small wins – should be reflected upon and celebrated. They are a source of learning and also a source of strength and conviction.

There are a lot of statistics about the failure of personal and organizational changes. At a personal level, 98 percent of New Year’s resolutions fail, 70 percent of Americans who pay off credit card debt with a home equity loan end up with the same or higher debt in two years, and despite the $ 40 billion a year Americans spend on diets, 19 out of 20 lose nothing but their money. Marriage counseling saves fewer than one in five couples on that brink of divorce. Only a quarter of those who have experienced heart attacks make behavioral changes. Efforts to overcome personal problems like eating disorders, depression, anxiety, or a sedentary lifestyle also have low long-term success rates.

The research done by authors identified three specific behaviors that HR professionals can demonstrate to help sustain change: ensure the availability of resources needed to stick with the change (money, information, technology, people), monitor and communicate progress of change processes; and adapt learnings about change to new settings.

The basic criteria for performance management are accountability (tie individual and team behavior to clear goals), transparency (financial and nonfinancial rewards for contributions are understood and made public), completeness (performance management practices cover the full range of behaviors and goals required for overall business success), and equity (reward levels should track with contribution levels).

Over the course of the last several years, RBL Group research on leadership effectiveness has identified a seminal shift in thinking about leadership and talent. Authors have made the case that a more strategic approach for leadership development should focus less on the social and technical skills if individual managers and more on leadership as an organizational capability: the ability of an organization to develop successive generations of leaders, at all levels, who reinforce external and internal confidence in the future and who are “branded” by the distinctiveness of their competence. For example, what are leaders at SONY or General Electric or Intel known for?

In recent years social media and supporting technologies such as wikis and blogs have emerged as the platform for companies to engage with internal employees, customers, and partners. Almost every company has a page in Facebook and LinkedIn. HR departments use twitter messages to attract prospective talent. Companies use videos and blogs on social media platforms to communicate about their work culture and present new opportunities to the external world. For example, Intel has a video on YouTube, and Deutsche Bank has developed a report called “Unofficial Guide to Banking” that simplifies content to demystify banking and attract new recruits. GE presents its new innovation projects on social media to project us innovative culture.

Consider this case of leveraging social media. When IBM was on the verge of bankruptcy in the early 1990s, CEO Lou Gerstner championed a strategic shift from selling computer products to delivering business technology solutions tailored to customer needs – and brought the company back to health in the process. Since then the focus of IBM’s business has been on knowledge. The company differentiates itself in the marketplace through unique and innovative custom solutions offered to capture a higher share of the customer wallet. Hence the knowledge and expertise of IBM employees is a critical asset. As early as 1997, when most organizations resisted the idea of employees accessing the Internet, IBM was encouraging employees to go online, both to access new information sources and also to collaborate with customers and partners.

Similar to the popular social networking platforms, IBM Connections allows employees to share status updates, collaborate on ideas, and share information. In addition, IBM employees manage more than 17,000 individual blogs on various topics. These platforms collectively become a terrific source of knowledge for IBM.

A thriving developmental environment incorporates the following practices: performance standards are well developed and well known; development is connected to performance; feedback supports team development; HR supports professional development through a combination of skill building and action learning practice that tests and challenges individuals and teams to grow; the HR department participants in learning partnerships; and HR has its own brand, based on outside-in insights. Here are some signs of where HR is headed:

1.    A larger role for HR

2.    Greater integration with other functions

3.    Shift in administrative responsibility.

4.    Global innovation.

5.    More impact of technology

6.    A different organizational mix and demographic (more women in senior roles; managing the diversity gap will be a challenging journey; and greater appreciation for the business within HR and in the business for HR)

7.    Higher expectations and rewards.

8.    Roles and structures will continue to evolve.

The authors conclude the book with a message that they are incredibly optimistic about the future of HR. By their count, there are almost one million HR professionals around the world. A growing number of graduate programs focus on HR, HR is an increasingly attractive concentration in MBA programs, and we see Google, Zappo, Baidu, and other organizations redefining and reinventing how HR is done in exciting ways. And in our programs at RBL-with clients in more than 50 countries-and in our work with HR executives at the Ross School of Business, University of Michigan, we are inclined to believe that the golden age of HR is still climbing toward its zenith.

HR Takeaways

• A successful self-improvement plan has five elements - recognition of the need for change; a specific goal, time frame, and plan of action for changing; support before, during, and after taking action; rigorous monitoring of progress; and help from a spotter or admired individual who reinforces and supports change motivation and commitment.
• Effective strategies focus attention on these sources of competitive uniqueness, as well as on any others that may be identified. Once strategic choices are made, plans can become more specific about actions, talent, and budgets. Through strategic choices, leaders invest time and money that make it possible to differentiate their company from competitors in the minds of targeted stakeholders.
• HR is not about an isolated activity (a training, communication, staffing, or compensation program) but about processes that generate sustainable and integrated solutions.
• Earning trust through results has three elements: set clear expectations; meet commitments; and display integrity. Earning trust through results means “doing the right thing in the right way at the right time with the right people.” But dig deeper, and integrity-ethics-becomes a critical dimension.
• Korn Ferry, the consulting firm, proposes that capabilities build strategic effectiveness and has boiled down 20 capabilities into seven categories: strategy execution; managing innovation and change; attracting, retaining, and motivating talent; leveraging a productive culture; managing profitability and delivering value; developing future leaders; and governance.
• A leadership brand has two key elements. The first of these is leadership competence in the fundamentals of being in change: what we called the “leadership code.” The second consists of the differentiators – the things that make a leader reflect and exemplify the character of a specific firm.
• Too often, we have seen HR professionals as the cobbler’s barefoot children, showing no signs of benefiting from the work practices they recommend and thus providing little incentive for other groups to try them.
• Many line managers have told authors. “I like my HR person, but I don’t like HR.”. This is a problem because the HR department has more potential for business impact than any individual HR professional.

What is the Recommendation?

This book outlines the importance of HR and how it adds value to organizations. It is a trendsetter in HR. HR leaders are often treated as kingmakers, not kings. But this book elevates the roles of HR leaders as real kings and queens.  The authors are experts in leadership and are authority on HR. It contains case studies, examples and illustrations. It shares striking stories that arouses interest to read until the end. The ideas and insights in this book are well-punched. It hits the bull’s eye. This is a book with practical application.

This is a well researched book authored with many years of experience in HR. Hence, the readers can expect the best out it. This is a highly inspiring book with HR nuggets. A must read for all HR scholars, practitioners and professionals to hone their art and craft. It is a bible on HR. Strongly recommended for reading!

“A must read for any HR executive. This research-based competency model is particularly compelling because it is informed by the perspective of non-HR executives and stakeholders.” —Sue Meisinger, Distinguished speaker and author, former CEO of SHRM

References

http://www.amazon.com/HR-Outside-In-Competencies-Resources/dp/0071802665

HR from the Outside In: Six Competencies for the Future of Human Resources by Dave Ulrich, Jon Younger, Wayne Brockbank and Mike Ulrich (McGraw-Hill; 1 edition, July 17, 2012)

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Professor M.S.Rao, India

Founder of MSR Leadership Consultants India

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